Pharmaceutical Fraud

Pharmaceutical Fraud

Fraud by the pharmaceutical – including manufacturers, pharmacies, and PBMs – have resulted in some of the largest False Claims Act recoveries. For example, in 2012, GlaxoSmithKline (GSK) agreed to pay $3 billion to resolve allegations that it engaged in pharmaceutical fraud.  The basis of this and similar actions is that one or more participants in pharmaceutical industry engaged in conduct that resulted in government healthcare programs, such as Medicare and Medicaid, being defrauded.

The fraudulent conduct underlying pharmaceutical FCA actions varies. Some cases involve prohibited sales techniques such as off-label marketing. Others involve paying kickbacks or bribes to doctors to prescribe their medications to patients. When either of these schemes occur, Medicare and Medicaid are almost always defrauded.

OFF-LABEL MARKETING OF PRESCRIPTION DRUGS

Many FCA actions brought to light that pharmaceutical manufacturers engaged in ”off-label marketing.” Off-label marketing is a type of pharmaceutical fraud that occurs when a pharmaceutical manufacturer promotes its drugs to prescribers for uses not approved by the Food and Drug Administration (FDA).

To provide some background information, when the FDA approves a drug, it approves the drug only for the particular use for which it was tested. In other words, the medication is approved to treat a specific medical condition. The United States Food, Drug and Cosmetic Act (FDCA) establishes the framework for regulation of the sales and marketing activities of pharmaceutical manufacturers in the United States, including the introduction of new drugs.  While a physician can prescribe a drug for a use other than the one for which it is approved, the FDCA prohibits a drug manufacturer from marketing or promoting a drug for non-approved uses. It therefore is illegal for a drug manufacturer and its sales representatives to promote or initiate discussions with medical professionals regarding any off-label use of a drug.

If a pharmaceutical manufacturer promotes a drug for an “off-label” use and a doctor prescribes the medication for that use, fraud has occurred, as those drugs are generally not covered under Medicare and Medicaid.  In some instances, a pharmaceutical manufacturer pays a kickback or bribery to physicians to encourage them to prescribe a drug for off-label use.

PHARMACEUTICAL ANTI-KICKBACK VIOLATIONS

Kickbacks paid to prescribing physicians have also been the basis for substantial FCA actions. The federal Anti-Kickback Statute prohibits offering to pay or paying healthcare providers to prescribe drugs to their patients. When this occurs, Medicare and Medicaid are defrauded because the federal government does not pay for medications which were prescribed because the doctor was bribed to do so.

As mentioned above, a pharmaceutical company may pay a kickback or bribery to physicians to encourage them to prescribe a drug for off-label use.  In some instances, a pharmaceutical company may pay a kickback or bribery to physicians to prescribe medications for intended purposes even though the patient does not need such medications.  

While the kickback or bribery scheme appears straight forward, pharmaceutical companies may engage in a deceptive form of kickback or bribery scheme as they are aware of the prohibition. As a result, in many cases, the payment made to doctors is not in the form of an outright bribe, but many times is disguised as a speaker fee or consulting fee. Payment is made under these circumstances with a wink and a nod, and regularly results in the doctor prescribing the drug produced by the company making payment.

Paying doctors to prescribe medications not only endangers patients – as they are being prescribed medications not because they are the best solution for the patients’ condition – but also costs the federal government billions of dollars. In many cases, the drug prescribed is very expensive and, in the absence of a bribe, the patient would have been prescribed either a much less expensive, generic medication or no drug at all.

What Is Pharmaceutical Fraud?

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